The Seoul District Court’s ruling on Coinis is likely to be significant for the crypto exchange industry at large. In September the Nonghyup bank announced that it will be terminating its banking partnership with the Coinis exchange. The bank disallowed the exchange from processing all kinds of withdrawals and deposits. In response, Coinis filed a request at the Seoul District Court to end the suspension of deposits in an attempt to restore its relationship with the bank.
To everyone’s surprise, the judge gave a ruling in favor of the Coinis exchange stating that Nonghyup’s decision was not made in accordance with the guidelines of the Financial Services Commission (FSC) on cryptocurrency related money laundering measures. The Attorney who represented Coinis, Kim Tae-rim said that this ruling given by the court to lift the suspension on the crypto exchange demonstrates that banks cannot just terminate services to businesses based on the guideline established by the FSC.
Speaking further on the court’s ruling, Kim added that crypto exchanges by default have the right to withdraw and deposit funds in major South Korean banks. In case any bank abruptly terminates the services and the partnership without sufficient reasoning or evidence is considered to be a breach of contract.
This case will be a classic example for the crypto industry, as going forward banks will need to exercise caution before ending relationships with exchanges without any legal grounds. This was not the first time that Nonghyup had made such a move. In fact, the bank has a history of declining partnership with the second largest cryptocurrency exchange in South Korea, Bithumb, as reported on Coingape.
However, in case of crypto exchange Bithumb, analysts stated that Nonghyup’s decision to delay the deal with the exchange was justified owing to the two back to back breaches that it suffered in the past. On the brighter side, 2018 witnessed many such legal battles where crypto companies won over banks. For instance, in May, the Bitfinance exchange was allowed by the High Court of Zimbabwe to resume its business. The latter reversed the decision of the central bank to restrict crypto related operations in Zimbabwe, as reported on Cryptonews.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]